The strong bull rally which started between the period of late March 2020, when fear in global investors was seen very high due to pandemic, has now taken India’s market over $3.5-trillion, which is more than double from about $1.3 trillion then. The factors that have contributed to this record-breaking rally in global markets, including India are the unprecedented amount of fund infusions by almost all the central banks to support their respective economies, record low-interest rate in most of the large markets, and investors’ urge to channelize their savings in the absence of lack of spending opportunities during the pandemic months.
The Sensex ended by 167 points higher at 58,297 on Monday. It is marked to be the third successive session of record closing with the intra-day high at 58,516. On the National Stock Exchange, the Nifty followed a similar record-breaking which closed at a peak of 17,378 points. As per the official record in 2021, both the Sensex and Nifty have rallied to fresh life-high marks around 40 times each. However, the Indian benchmarks still move slowly as compared to their US peers. For example, the corresponding number for the S& index is 54 times.
Last month, after the US Fed chief, said that it was unlikely to raise interest rates in a hurry the rally got another boost. As a result, making India the best performing stock market in the world, Sensex added nearly 5,000 points or 9.4 percent.
The official data showed that since March 2020, the biggest booster to investors’ wealth as measured by the BSE’s market capitalization, came from Reliance Industries that saw its market value jump by $134 billion to $210 billion now. The other significant wealth-creators are TCS, up to $110 billion to $191 billion, and Infosys —from $70 billion to $110 billion now.
The markets are scaling new highs led by strong earnings delivery, benign liquidity, and buoyant sentiments. “Good earnings delivery (during the first quarter of fiscal 2022) has boosted hopes for a solid FY22 with 30%+ projected Nifty earnings growth, on the back of a strong 15% earnings growth in FY21,” according to a report by Motilal Oswal Financial Services (MOFSL).
In addition to strong corporate earnings, a stable currency that’s been showing an appreciating trend in the past two weeks also attracted foreign funds into Indian markets with the net buying for 2021 at over Rs 55,000 crore, data from CDSL showed.
By reports of MOFSL, in the future, management commentaries across the board suggest an improved demand environment after June 2021, led by easing of restrictions, lower active Covid cases, and a pickup in vaccinations, the report by MOFSL noted.